Abstract
Information and communication technologies (ICT) are generally believed to have significant potential to reduce energy intensity. In contrast to previous empirical studies, which have relied on aggregated data, we conduct the first large-scale firm-level investigation into this relationship. Our results, which are based on administrative panel data on 28,600 German manufacturing firms, confirm a robust negative relationship between software capital (our proxy for the degree of firm digitalization) and energy intensity for the years 2009 to 2017. However, the effect size is rather small. For the average firm, we find that a 1 percent increase in software usage relates to a decrease in energy intensity by 0.003 percent. Hence, contrary to previous industry-level results, we do not observe substantial energy intensity improvements in connection with ICT adoption. Moreover, we find that the relationship between ICT and energy intensity exhibits properties that can lead to an aggregation bias. JEL Classification: C32, H23, O33, O38, Q56, Q58.
Published Version
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